financial forecasting technical briefing session...key components of the expenditure forecast 4...

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FINANCIAL FORECASTINGTechnical Briefing Session

Reach every child

Tony Dutson

21 June 2016, Geneva

Responding to Country demand: Forecasting the expenditure needed

2 Technical Briefing

21 June 2016

The Financial forecast

• Estimates the cost of responding to Country demand

• Provides visibility on future expenditure needs

• Informs funding decisions

• Can Gavi afford it?

• Programme Funding Policy sets the “rules”

Responding to Country demand


21 June 2016

Forecasting the expenditure

Key components of the Expenditure Forecast


21 June 2016

2016-2020 Expenditure

US$ bn

Vaccines 6.0 75%

Cash-based Programmes 2.0 25%

Total Programmes 8.0 100%

PEF & Secretariat 1.5

Total Expenditure 9.5

Quantifying demand starts with estimating the number of doses each programme will need, in each country


21 June 2016

1st

dose

2nd

dose

3rd

dose

Total

doses

Birth Cohort

A Surviving Infants

B Coverage target 90% + 87.5% + 85%

A x B Doses needed 882 + 858 + 833 2573

100% (say 1000)

98% (say 980)

Illustrative example of dose calculation

Doses to administer 100

Allowance for wastage 5

105

Buffer stocks 25

130


21 June 2016

Illustrative example of dose calculation… extended to multiple years


21 June 2016

Launch date ?

Coverage ?

Data reliability ?

Year 1 Year 2 Year 3

Doses to administer 100 100 100

Allowance for wastage 5 5 5

105 105 105

Incountry buffer stocks 25

Doses required 130 105 105

Adjusted for timing > Shipment Plan

Repeated for ~300

‘Country-Vaccine’ pairs

Inherent

Uncertainty !

Expenditure forecast is built from bottom up

8

Vaccine 1 - Penta Commit. 2014 2015 2016 2017 2018 2019 2020

Total DosesCountry A Existing

Country B Existing

Country C Existing

Country D Future

…

Total Doses vaccine X

Co-financed dosesCountry A Existing

Country B Existing

Country C Existing

Country D Future

…

Total co-financed Doses

GAVI funded dosesCountry A Existing

Country B Existing

Country C Existing

Country D Future

…

Total GAVI Funded doses x x x x x x x

Vaccine 2 - Pneumo

Vaccine 3 - Rota

Vaccine 4 - HPV etc

1Country demand:

Vaccines,

Volumes, Years

2Prices &

Cash-flow

timing

3Expenditure

Forecast -

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Expenditure Estimates 2011 - 2020 (US$ millions)GAVI cash outflows & Country co-financing

Business Plan Cash Based Programmes Vaccines Programmes

Strategic Investments Country co-financing Total GAVI funded

2013-15 average per year:$1.7 bn GAVI-funded

$0.1 bn Country co-financed

2016-20 average per year:$ 1.9 bn GAVI-funded

$0.23 bn Country co-financed

Technical Briefing

21 June 2016

Allowing for the uncertainties

• Multiple factors cause uncertainty (e.g. timing of introduction,

actual coverage, price evolution, etc.)

• Forecast must serve diverse objectives:

• Prudence, when committing to new programmes

• Probability, when forecasting needs spanning many years

• To date, prudence has been highly weighted

• Now seeking to better balance that with probability

• Range estimates around a (less conservative) centre line

• Tradeoffs between simplification and functionality


21 June 2016

Output from the forecast:Projected expenditure by programme type

10 Board meeting 22-23 June 2016

Expenditure estimate

2016-2020

Estimate

for future

demand

TotalAnnual

Average

Endorsed

Provis ion

for

Extens ions

Programmes:

Penta 61 959 - 1,020 13%

Pneumo 127 2,124 251 2,503 31%

Rota 98 415 239 752 9%

Measles-Rubella 258 - 271 529 7%

Measles SIA 4 - 6 10 0%

HPV - routine 40 36 281 357 4%

Typhoid - - 136 136 2%

IPV/Polio 84 121 - 204 3%

Other vaccines 152 95 274 520 6%

Total Vaccine Programmes 824 3,750 1,458 6,031 75% $1.2 bn

Health systems strengthening 601 - 706 1,308

Campaign operational costs 129 - 339 467

Vaccine introduction grants (incl. IPV) 9 - 133 142

Measles SIA operational costs 8 - 1 9

All other cash (ISS, CSO, HPV etc) 28 - 10 37

HSIS 774 - 1,189 1,963

CCEOP - - 50 50

Total Cash-based Programmes 774 - 1,239 2,013 25% $0.4 bn

Total Programmes 1,598 3,750 2,697 8,045 100% $1.6 bn- -

Partners 916 916

Secretariat 557 557

PEF & Secretariat (Business plan) 1,473 - 1,473 $0.3 bn

Total Expenditure 1,598 5,223 2,697 9,518 $1.9 bn

2016-2020 $2.7 bn $9.5 bn

Cash flow basis, US$ million

$6.8 bn

Existing

Programmes


2016-2020

Estimate

for future

demand

TotalAnnual

Average

Endorsed

Provis ion

for

Extens ions

Programmes:

Penta 61 959 - 1,020 13%

Pneumo 127 2,124 251 2,503 31%

Rota 98 415 239 752 9%



HPV - routine 40 36 281 357 4%

Typhoid - - 136 136 2%

IPV/Polio 84 121 - 204 3%








HSIS 774 - 1,189 1,963

CCEOP - - 50 50



Partners 916 916

Secretariat 557 557



2016-2020 $2.7 bn $9.5 bn


$6.8 bn

Existing

Programmes

Output from the forecast: Projected expenditure by programme type


Vaccines

PEF/Secretariat

HSIS/CCEOP


2016-2020

Estimate

for future

demand

TotalAnnual

Average

Endorsed

Provis ion

for

Extens ions

Programmes:

Penta 61 959 - 1,020 13%

Pneumo 127 2,124 251 2,503 31%

Rota 98 415 239 752 9%



HPV - routine 40 36 281 357 4%

Typhoid - - 136 136 2%

IPV/Polio 84 121 - 204 3%








HSIS 774 - 1,189 1,963

CCEOP - - 50 50



Partners 916 916

Secretariat 557 557



2016-2020 $2.7 bn $9.5 bn


$6.8 bn

Existing

Programmes

Output from the forecast: Projected expenditure by programme type


Existing Future



Forecasting the Resources

Resources available to Gavi


Projected resources 2016-2020 (as indicated to the Board in December 2015)

US$ millions 2016-2020Annual

Avg

Resources Available

Direct contributions - confirmed 6,761 1,352

Direct contributions for IPV 252 50

IFFIm Proceeds 1,314 263

AMC Proceeds 350 70

Investment Income 180 36

Total Inflows 8,857 1,771

Decrease/(increase) Cash & Invest Reserve 31 6

Assured Resources 8,888 1,778

Allowance for Further Contributions 518 104

9,406 1,881 0

Add: Available from 2015 (per December 2015 forecast) 444 89 444.00 88.80

Qualifying Resources 9,850 1,970

Annual

Avg.

1,970

Estimating the allowance for further contributions … important for programme funding decisions

0

200

400

600

800

1,000

1,200

1,400

1,600

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Direct contributions used for decision making purposes

Direct contributions - already confirmed (Net) Allowance for further contributions

3 Year average


Allowance,

to reach the

3-year average



Informing funding decisions

Resource availability for funding decisions– 2 key requirements

1: As a prerequisite to the

approval of any new programmes,

an amount of Qualifying

Resources shall be set aside

to fully cover all commitments

arising in the first 3 years


Cash flow basis US$ millions 2015 2016 2017 2018 2019 2020 2021*

Total Expenditure to meet demand 1,869 1,933 2,039 1,855 1,822 1,800

Proposed new programmes / investments 15 9 9 9 9

Total Expenditure 1,884 1,942 2,048 1,864 1,831 1,800

Qualifying Resources available 1,761 1,818 2,055 1,884 1,888 1,800

Additional available / (required) - for year (123) (124) 7 20 57 0

Additional available - cumulative 444 321 197 203 223 280 280

2018 2021

First 3-year period Second 3-year period

Resource availability for funding decisions– 2 key requirements

1: As a prerequisite to the

approval of any new programmes,

an amount of Qualifying

Resources shall be set aside

to fully cover all commitments

arising in the first 3 years


2: Also provide visibility

on the following 3 years

… so the Board can take

account of the longer-term

implications

Cash flow basis US$ millions 2015 2016 2017 2018 2019 2020 2021*

Total Expenditure to meet demand 1,869 1,933 2,039 1,855 1,822 1,800

Proposed new programmes / investments 15 9 9 9 9

Total Expenditure 1,884 1,942 2,048 1,864 1,831 1,800

Qualifying Resources available 1,761 1,818 2,055 1,884 1,888 1,800

Additional available / (required) - for year (123) (124) 7 20 57 0

Additional available - cumulative 444 321 197 203 223 280 280

2018 2021

First 3-year period Second 3-year period

Going forward

• Forecast will be updated for December

Board meeting

• Briefing then will explain the new features of

the forecast

Thank you!


www.gavi.org

THANK YOU

Reach every child

Board meeting 22-23 June 2016

financial forecasting technical briefing session...key components of the expenditure forecast 4...

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